Sodexo (OTC: SDXAY), a global event manager and catering company, has acquired Centerplate; the 4th largest operator, by revenue ($1.18 billion, 12-month prior to June ‘17), of food and hospitality services at U.S. sports and entertainment venues. SDXAY generated $1.07 billion in ’16 sports and leisure revenue, so the $675 million acquisition will more than double the company’s business within the segment. CEO Sports & Leisure Worldwide for Sodexo, Pierre Henry, explained that the acquisition is “another step in our long-term strategy to become a leading player in every market in which we are present.” Centerplate CEO Chris Verros will stay on board to lead the company’s U.S. business.
Howie Long-Short: Back in July, Jefferies analyst Kean Martin said, “Sodexo may be losing market share to Compass (OTC: CMPGY), which benefits from scale and a differentiated multi-brand strategy, particularly in the US.” Well, picking up Centerplate helps SDXAY increase U.S. market share; and 2017 acquisitions of Prestige Nursing + Care (home-care) and Morris Corporation (facilities management) strengthen the company’s multi-brand strategy. It seems as if SDXAY is headed in the right direction, after the company cut its full-year sales growth target; following a disappointing fiscal Q3 ’17 (in July). Temper your short-term expectations though, Sodexo only expects the Centerplate transaction to be “mildly accretive to earnings for fiscal ‘18”.
Fan Marino: Centerplate currently operates at the following U.S. sporting venues; Hard Rock Stadium (Miami Dolphins), Safeco Field (Seattle Mariners), AT&T Park (San Francisco Giants), BB&T Center (Florida Panthers) and Smoothie King center (New Orleans Pelicans). My personal all-time favorite Centerplate creation? The Ichiroll at Safeco Field.
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